A Steady Jobs Report Pours Cold Water On Fed Rate Hawks
By Peter Navarro | RealClearMarkets | July 2, 2026
Today’s jobs report paints a picture of a steady and stable economy that the Federal Reserve should not derail with a rate hike.
The bond market, which is far smarter collectively than the Fed Board of Governors, seemed to understand this immediately. Treasury yields fell across the policy-sensitive points of the curve after the report. The probability of a near-term rate hike fell sharply. By one market measure, the odds of a September hike dropped below 50 percent.
That is exactly the right reaction. And a rate cut should remain very much on the table.
Digging a little deeper, the headline number was not spectacular. Payrolls rose by 57,000 in June, below expectations. April and May were revised down by a combined 74,000 jobs. Private payrolls rose by 49,000. The three-month average slowed.
But this is not a recession report. The unemployment rate ticked down to 4.2 percent. Initial jobless claims remain low. Layoffs are not flashing red. The economy is still creating jobs, just at a more sustainable pace.
That distinction matters because the old six-figure monthly jobs benchmark belongs to the open-border Biden economy. When millions are flooding across the border, the economy needs very large monthly payroll gains simply to keep the unemployment rate from rising. In a secure-border world, the steady-state number is much lower. It is five digits, not six.
This is one of the most important points the financial press continues to miss. Slower job growth is not automatically weakness if labor-force growth has also slowed. A properly secured border changes the breakeven math.
The most important number in the report may be wages. Average hourly earnings rose 0.3 percent in June and are up 3.5 percent over the year. In Trump Land, that matters. The purpose of economic policy is not to maximize the flow of low-wage imported labor. It is to raise the wages, productivity, and living standards of American workers.